PROJECT SUMMARY/ABSTRACT Under the ACA?s Hospital Readmissions Reduction Program (HRRP), the Centers for Medicare and Medicaid Services (CMS) imposes financial penalties on hospitals for excess 30-day risk- adjusted readmission rates for targeted conditions. Despite seeming initial success with the HRRP, a number of observers have expressed serious concerns over the penalty rules and some have recommended changes to the program. A particular criticism involves the HRRP impact on safety net hospitals (SNHs), which serve a relatively high proportion of low income patients, who have low self-efficacy and a higher probability of readmission. If SNHs are being penalized in part for readmission risk due to socioeconomic factors outside their control, a different policy may be appropriate for these facilities. The ACA specified the penalty formula and ceilings, the timetable for implementation, and the three initial target conditions. This foundation was passed into law; CMS was granted authority to expand the program ?as determined appropriate.? To date, assessments of the HRRP largely have examined overall changes in readmissions or have identified hospital features associated with penalties. However, no studies have focused on individual hospital improvement under the program or on the types and characteristics of hospitals that achieved greater reductions in readmissions. By definition, hospitals that had the highest readmission rates received the highest penalties. However receiving the greatest penalties does not equate with achieving the greatest improvement, and the characteristics of hospitals receiving higher penalties do not necessarily correlate with those of the hospitals realizing the greatest readmission reduction. Using descriptive and statistical techniques, this project measures improvement rates for individual hospitals and hospital catchment areas and identifies characteristics associated with greater and with smaller improvement in 30-day readmission rates. Knowledge of what types of hospitals and which populations are achieving the greatest success under the HRRP and of where it has failed to reduce readmissions will provide valuable new information to CMS as it refines the program.